European stocks shrug off Japan market dip

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AMSTERDAM (AP) — European stocks shrugged off a slide on the Japanese stock market Monday and traded higher as a member of the European Central Bank repeated the bank's commitment to low interest rates.

German executive board member Joerg Asmussen said in a speech in Berlin that with the European economy in recession, the bank would continue to pursue easy monetary policy "as long as necessary."

In Japan, the yen strengthened and stock market fell sharply after Bank of Japan Governor Haruhiko Karoda said over the weekend interest rates could rise without causing instability as the Japanese economy strengthened.

The Nikkei 225 shed 3.2 percent to close at 14,142.65, with exporters hit hardest due to the rising yen. That's the reverse of the picture for most of this year, when yen losses helped propel the index to a 36 gain since January.

In European trading, Germany's DAX rose 0.5 percent to 8,349.43. France's CAC-40 advanced 0.7 percent to 3,983.24. Markets in Britain and the U.S. were closed for public holidays.

The yen's recent weakness has been a byproduct of the economic stimulus policies embraced this year by Prime Minister Shinzo Abe, who has embarked on an aggressive campaign to lift consumer prices and encourage borrowing and spending. As part of that effort, Japan's central bank is flooding its financial system with money, helping reduce the value of the yen.

Hopes for a global economic recovery were undermined last week when a survey on China's monthly manufacturing pace showed a bigger-than-expected decline. Less-than-clear indications from the U.S. Federal Reserve on whether it might scale back its aggressive bond-buying program, dubbed quantitative easing or QE, also caused investors to curb their enthusiasm.

"We have seen a lot of funds buying into shale gas, wind power and environmental protection," said Jackson Wong, vice president at Tanrich Securities in Hong Kong. Wong also said that a recovery in mainland Chinese stocks helped the Hang Seng.